Posts from 2019

Mobile Ticketing

The Gotham Gal and I walked into the Musee de l’Orangerie yesterday and found a line of about 20 people waiting to purchase tickets to enter. The Gotham Gal whipped out her phone, went to the Orangerie website, and bought two tickets that were sent to her phone. It took her less than a minute to do it and we walked in. As we were leaving we noticed the ticket line had almost doubled. We shook our heads and made our way to our next stop.

The mobile phone we all have in our pocket or purse can do so many things but one of its superpowers is a point of sale terminal. Increasingly there is no reason to wait in line for tickets to anything. You can just get them on your phone.

I really like just in time ticketing with the phone. I have the NYC East River Ferry app on my phone and whenever I want to take a boat to Brooklyn or Queens, or back, I open up the app, provision a ticket or two if I’m round tripping it, and I’m good to go. I am seeing more and more mass transit systems adopt this approach.

And then there is the NYC subway system which has started to roll out new turnstiles which you can tap and pay at:

I remember the days of carrying metal tokens in my pocket. It wasn’t that long ago!

The smartphone is twelve years old at the end of the month. It is remarkable to step back and think about how much it has changed how we live and work.

Funding Friday: A Window Pane Solar Panel

I saw this project earlier this week and backed it immediately. Solar energy is not easy to adopt. But I have found that once you start, you get into it and keep going.

This might make it easier for some to start down that path.

Cloudflare’s Galileo Project Turns Five

Our portfolio company Cloudflare provides a suite of mission critical security services, and increasingly other services too, in the cloud to their customers. Among the most well known of these security services is DDOS protection (aka denial of service attack protection). A DDOS attack is a massive traffic burst aimed at a website to take of offline.

Among the most vulnerable and attacked websites are those belonging to non-profits and other organizations doing work that upsets those in power.

So Project Galileo is Cloudflare’s effort to provide security services to these sorts of organizations for free so they can stay online and continue to do their work.

And Galileo turns five years old this week.

Matthew Prince, Cloudflare’s CEO and co-founder, wrote this blog post yesterday celebrating five years of Galileo and he explains why this is so important to Cloudflare, the Internet, and the world.

Helium

One of the areas of blockchain innovation I am most excited about is building open, permissionless, and decentralized technology infrastructure.

The three areas that seem most obvious to me for decentralized infrastructure are compute (code execution), storage (storing files, etc), and bandwidth (network infrastructure).

And today, we are excited to announce that USV has made an investment in a decentralized network infrastructure project called Helium.

My partner Nick, who led this investment for USV, wrote about Helium on the USV blogand explains why we made the investment (as is our practice with all new investments). I would encourage you to read that blog post as it explains a lot about how Helium works, how the token economics builds the supply side of the network infrastructure, and why it fits so neatly into our investment thesis.

I would just like to point out how cool Helium is.

Anyone can run a Helium hotspot in their home:

And then they can earn Helium tokens for doing so.

You can run a hotspot in your home/apartment and do the equvalent of bitcoin mining for network infrastructure.

Helium is optimized for very long distance, low power communications. It is ideal for Internet of Things (IoT) devices. Think about electric scooters needing to “phone home” over long distances. Think about your dog’s name tag. Think about figuring out when the school bus is going to arrive at the bus stop.

We plan to run a Helium hotspot or two at USV and it would be great to see people powered Helium networks popping up all over the place and providing very low cost, low power, highly reliable long range network infrastructure.

Turning Streetlights Into EV Charging Stations

Owning an EV in a dense urban city is challenging. Most people don’t have their own garages and so they park on the street or in large parking garages. We do the latter.

About five or six years ago, I walked into our parking garage and saw that the garage operator had installed a ChargePoint charging station in the garage.I literally walked back across the street to our apartment and bought our first EV. We now own three.

But charging with ChargePoint is not ideal. There are a limited number of these charging stations in our parking garage and more and more EVs. They are often filled up. And the rates that ChargePoint supplies electricity at are borderline gouging. They have a monopoly on our garage and price accordingly. I believe the rate we pay in our parking garage in NYC is literally double the rate we buy electricity from ConEdison in our NYC appointment.

In our homes in Los Angeles and Long Island we charge off our solar panels on our roofs and basically don’t pay to charge our EVs other than the depreciation on the solar installation costs. That is absolutely the way to go if you can afford the cost of a solar installation.

But back to dense urban areas like NYC. If we want more EVs and less gas powered cars on our streets, we need better charging infrastructure.

In Paris, where we have been for the last few days, they are trying an experiment with putting EV charging stations on street lights.

 

If the city makes those curb locations only available for charging and not parking, that could be a great option for encouraging more city dwellers to buy or rent EVs.

I believe the availability of charging options, whether it is a rational fear or not, is holding back a lot of people from moving from gas to electric. So anything that can change that dynamic is a good thing in my view.

Seven to Ten Years

I have worked in three venture capital firms over the last thirty-three years and am intimately familiar with the performance of the fifteen (ish) venture funds raised and invested by these three firms. Much of what I have written about fund management and investment performance here at AVC over the last sixteen years comes from my observations of these funds and firms.

Starting in the mid-00s, The Gotham Gal and I started investing in other venture capital funds, always limiting these investments to firms where we knew the partners well and had sat on boards with them.

And The Gotham Gal started angel investing around the same time, often writing the first check into startups. She has made something like 140 angel investments over the last dozen years, mostly into companies founded by women.

We keep good records on these personal investments and I now have another data set to observe.

Across these three sources of data (my firms, other firms, angel investments), there are well over 1000 individual angel, seed, and early stage venture capital investments over four decades.

I have no plans to publish this data. It is not in a single database and there is a ton of confidential information in it.

But I can observe things about this data and have been doing so and will continue to do so.

One of the great truths about early stage investments is that you have to be patient with them. The losses come early and the winners take longer to realize.

It takes seven to ten years to get to real liquidity in a portfolio of early stage venture investments. You can’t short cut it. It just takes time. But come years seven, eight, nine, and ten the returns will start coming in.

I am not sure why seven to ten years and not five to seven or not ten to fifteen. It’s seven to ten. That’s how it has always been and seemingly always will be.

Low (No) Barriers To Entry

There are a dozen electric scooter companies operating in Paris right now. There are so many that the Mayor just announced that she will reduce that number to three with new rules for electric scooters in Paris.

But before we get into the new rules, I want to stare at that first sentence for a bit.

In less than a year, twelve companies have started operating electric scooter services in Paris.

Paris is the largest electric scooter market in the western world right now.

To enter this business, you need capital to purchase the scooters from China, you need a mobile app on iOS and Android to allow users to locate, unlock, and pay for the use of one, and you need a small team to handle the local logistics.

Apparently those are not significant barriers because a dozen different companies have been able to do it in less than a year.

There are many things that are attractive about the electric scooter business. It has taken off as a transportation option for consumers and is the fastest growing new transportation technology in terms of revenues in history.

Electric scooters also are a much cleaner way to travel than cars or other gas powered technologies.

So there is a lot to like about this business.

But if anyone can open up shop and compete with you with little to no differentiation and your only defensibility is the time it takes to download a new mobile app and put in your credit card, well then one has to ask if this is or will be a good business.

And that is where the Mayor of Paris comes into the picture. She wants to limit the number of scooter providers to three, by requiring licenses and issuing only three of them.

That will sufficiently lower the competition in Paris, lead to a triopoly which may stabilize pricing and margins, and possibly reduce the number of scooters littered all over Paris.

Winning a license will be a political process and there are many issues with that. And the three companies that win a license will become acquisition targets for the big players which are increasingly the ride share companies (who themselves have very low barriers to entry but now have public currencies to buy with).

There are many who have wondered whether ride share will ever be a good business. The public market caps of Uber and Lyft suggest that it will be or that there are plenty of people who currently think it will be.

Scooters are ride share on steroids. Even easier to get into the game with possibly a larger market opportunity.

It will be quite interesting to see how this plays out and how much regulation will be needed to tame this market.

Funding Friday: DefendCrypto.org

As expected, the SEC sued USV’s portfolio company Kik this week. Here is Kik’s response to the news:

This part of Kik’s response explains that the SEC is stretching the interpretation of the Howey ruling (from almost a century ago) in its efforts to claim jurisdiction of crypto token regulation:

For the reasons set forth in our Wells Submission, the SEC’s complaint against Kik is based on a flawed legal theory.  Among other things, the complaint assumes, incorrectly, that any discussion of a potential increase in value of an asset is the same as offering or promising profits solely from the efforts of another; that having aligned incentives is the same as creating a ‘common enterprise’; and that any contributions by a seller or promoter are necessarily the “essential” managerial or entrepreneurial efforts required to create an investment contract. These legal assumptions stretch the Howey test well beyond its definition, and we do not believe they will withstand judicial scrutiny.

https://www.prnewswire.com/news-releases/kik-responds-to-sec-complaint-300862114.html

I believe that crypto networks are different than companies and that crypto tokens are different than securities. I look forward to seeing these issues debated in a court of law instead of the basement conference rooms in DC.

If you are interested in supporting Kik’s case, you can do so by contributing crypto tokens to DefendCrypto.org.